SKG sees first-half loss almost double

PAPER and packaging firm Smurfit Kappa Group (SKG) has seen its first-half loss nearly double.

The company, formed last December from a merger of Jefferson Smurfit and Dutch firm Kappa, yesterday said the combined loss for the two firms in the six months to end June was €110.4 million, up from €54m in the first half of 2005.

The increased loss comes following higher interest charges, operating expenses and restructuring costs from the merger of the two firms.

Chief executive Gary McGann said earnings had improved somewhat in the second quarter.

“Year on year, however, SKG’s financial performance does not yet show a corresponding improvement, as increasing variable costs dampen the impact of rising prices,” he said.

Sales at the combined company in the first half were €3.15 billion compared to €2.12bn in 2005. About €3bn of the total sales were generated in Europe, with the rest from Latin America.

The company generated income of €154m from its European operations and income of €59m from its Latin American arm.

However, an interest bill of €167m and restructuring costs sunk Smurfit Kappa nearly €111m into the red.

The company also reported “good growth” in Colombia, Mexico and Venezuela.